Ccpi Inc. v. American Premier, Inc.

• Decision Date: 11 June 1997
• Docket Number: Civil Action No. 96-446 MMS.
• Citation: 967 F.Supp. 813
• Parties: CCPI INC., Plaintiff, v. AMERICAN PREMIER, INC., Defendant.
• Court: U.S. District Court — District of Delaware

967 F.Supp. 813

CCPI INC., Plaintiff, v. AMERICAN PREMIER, INC., Defendant.

Civil Action No. 96-446 MMS.

United States District Court, D. Delaware.

June 11, 1997.

Jeffrey B. Bove, N. Richard Powers, of Connolly, Bove, Lodge & Hutz, Wilmington, DE (David J. Josephic, Theodore R. Remaklus, of Wood, Herron & Evans, L.L.P., Cincinnati, OH, of counsel), for plaintiff.

Jack B. Blumenfeld, Julia Heaney, of Morris, Nichols, Arsht & Tunnell, Wilmington, DE (Steven I, Weisburd, Douglas A. Miro, Daniel N. Calder, of Ostrolenk, Faber, Gerb & Soffen, New York City, of counsel), for defendant.

OPINION

MURRAY M. SCHWARTZ, Senior District Judge.

I. INTRODUCTION

Plaintiff CCPI, Inc. ("CCPI") filed suit against American Premier, Inc. ("API") on September 11, 1996, alleging infringement of its U.S. Patent No. 5,358,551 ("the '551 patent"). API denied infringement in its answer and asserted five affirmative defenses and a counterclaim. On December 30, 1995, the Court entered a Scheduling Order which permitted the parties to file motions to amend the pleadings until March 14, 1997. Discovery continues apace, albeit with the usual extraneous squabbles and tiffs seemingly endemic to far too many members of the patent bar.

Pending before the Court is API's March 14, 1997 motion for leave to file an amended answer containing three new counterclaims and four new affirmative defenses pursuant to Rule 15(a) of the Federal Rules of Civil Procedure and to join Foseco International Ltd., and Foseco, Inc. (collectively, "Foseco"), and Bethlehem Steel as defendants to the counterclaims pursuant to Rules 13(h), 19 and 20 of the Federal Rules of Civil Procedure. CCPI has opposed leave to amend the answer to include the three new counterclaims and one of the new affirmative defenses. For the reasons below, API's motion for leave to amend will be granted in accordance with the limitations outlined in this opinion.

II. FACTUAL BACKGROUND

CCPI, API, Bethlehem Steel, and Foseco are four of the handful or so of companies that supply shaped tundish impact pads for use in the steel industry.¹ Titles to several patents covering tundish impact pads of various shapes and design seem to float among the parties. CCPI is the holder of the '551 patent and is suing API for infringement of that patent. Bethlehem Steel is the title holder of a separate patent covering impact pads, U.S. Patent No. 5,169,591 ("the '591 patent"), and Foseco is both the assignee of that patent and has a pending application for another patent covering impact pads.

During discovery, API unearthed copies of two agreements to which CCPI was a party. The first was a license agreement among CCPI, Bethlehem Steel, and Foseco. Pursuant to that agreement, Bethlehem Steel gave CCPI rights to sell circular impact pads, presumably covered by its '591 patent, and CCPI gave Foseco a royalty-free license in the United States and Canada to make, use, and sell rectangular impact pads, presumably covered by CCPI's '551 patent. Docket Item ("D.I.") 35 at Exhibit ("Exh.") A, page ("p.") 5. The second agreement was between CCPI and Foseco and purported to settle conflicting and overlapping patent rights relating to tundish impact pads. Id.

After examining these documents, API sought to amend its answer to add three new counterclaims and four new affirmative defenses. CCPI opposes the addition of all three new counterclaims, but only one of the four new affirmative defenses. These will be discussed below.

III. DISCUSSION

A. API's Motion to Amend its Answer

1. Rule 15(a) principles

Motions to amend the pleadings are governed by Rule 15(a) of the Federal Rules of Civil Procedure. Rule 15(a) states if twenty days has elapsed since a party has served a pleading to which no responsive pleading is permitted, that party may amend its pleading "only by leave of court or by written consent of the adverse party; and leave shall be freely given when justice so requires." The Supreme Court of the United States has cautioned the lower federal courts to heed the liberal policy of amendment embodied in Rule 15(a). Foman v. Davis, 371 U.S. 178, 181-82, 83 S.Ct. 227, 229-30, 9 L.Ed.2d 222 (1962). While recognizing the decision to grant or deny leave to amend is committed to the discretion of the district court, the Supreme Court has stated leave to amend should be granted absent "undue delay, bad faith, or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [or] futility of amendment." Id. at 182, 83 S.Ct. at 230.

Mindful of the Scheduling Order,² CCPI has pressed only one reason leave should be denied — the alleged futility of API's amendment. Under Rule 15, an amendment is considered futile if it cannot withstand a motion to dismiss. Jablonski v. Pan Am. World Airways, Inc., 863 F.2d 289, 292 (3d Cir.1988); Site Microsurgical Sys., Inc. v. Cooper Co., 797 F.Supp. 333, 336 (D.Del. 1992).

The standards for deciding a motion to dismiss are familiar; a motion to dismiss will be granted if it is beyond doubt the litigant cannot prove a set of facts which would entitle him to relief. FED.R.CIV.P. 12(b)(6); Conley v. Gibson, 355 U.S. 41, 45-46, 78 S.Ct. 99, 101-02, 2 L.Ed.2d 80 (1957); ALA, Inc. v. CCAIR, Inc., 29 F.3d 855, 859 (3d Cir.1994). The facts alleged in API's amended answer must be accepted as true and all reasonable inferences drawn from those facts are construed in API's favor. See Nami v. Fauver, 82 F.3d 63, 65 (3d Cir.1996).

2. The second and fourth counterclaims

API's proposed second counterclaim alleges CCPI conspired with Bethlehem and Foseco to cross-license related patents among themselves, to refuse licenses to others, to sue jointly alleged infringers irrespective of whose patent was allegedly infringed, and to defend jointly, without the individual right to settle or abstain, any declaratory judgment action filed by a third party. D.I. 34 at Exh. B, at 10-11. These exploits, API asserts, do violence to the antitrust protections of Section 1 of the Sherman Act, 15 U.S.C. § 1.³ See Mannington Mills, Inc. v. Congoleum Indus., Inc., 610 F.2d 1059, 1072 (3d Cir.1979) ("It may well be that an exclusive license to one party would be valid, but here the patentees have joined hands with the two largest competitors in the industry and by terms of their agreement have virtually made it impossible for others to obtain rights under those patents.") (quoting with approval United States v. Besser Mfg. Co., 96 F.Supp. 304, 311 (E.D.Mich.1951), aff'd, 343 U.S. 444, 72 S.Ct. 838, 96 L.Ed. 1063 (1952)). A plaintiff alleging a violation of section 1 of the Sherman Act ordinarily must establish the relevant product and geographic markets and demonstrate the effects of the unlawful restraint within those markets. See, e.g., Orson, Inc., v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir.1996) (When stating a claim under Section 1 of the Sherman Act, "a plaintiff must prove that anticompetitive effects were produced within the relevant product and geographic markets."); Tunis Bros. Co., Inc. v. Ford Motor Co., 952 F.2d 715, 722 (3d Cir.1991).

API has argued in its brief that its proposed second counterclaim can be read to accuse CCPI, Bethlehem Steel, and Foseco of forming a "horizontal group boycott" in per se violation of Section 1 of the Sherman Act. The area of per se antitrust illegality is carefully limited, see Walker Process Equip., Inc. v. Food Mach. & Chem. Corp., 382 U.S. 172, 178, 86 S.Ct. 347, 350-51, 15 L.Ed.2d 247 (1965), and courts have held in certain limited circumstances that a horizontal conspiracy is a per se violation of Section 1 of the Sherman Act.⁴ See Northern Pacific Ry. Co. v. United States, 356 U.S. 1, 5, 78 S.Ct. 514, 518, 2 L.Ed.2d 545 (1958) (acknowledging some practices, "because of their pernicious effect on competition and lack of any redeeming virtue are conclusively presumed to be unreasonable and therefore illegal without elaborate inquiry as to the precise harm they have caused or the business excuse for their use."); Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1367 n. 9 (3d Cir.1996) ("Horizontal boycotts have received illegal per se treatment."); United States v. Brown Univ., 5 F.3d 658, 670 (3d Cir.1993) (horizontal price-fixing illegal per se); Westman Comm'n Co. v. Hobart Intern., Inc., 796 F.2d 1216, 1224 n. 1. (10th Cir.1986) (holding a group boycott is per se illegal so long as there is "agreement among conspirators whose market positions are horizontal to each other.").

If API can prove a per se violation of the Sherman Act, then allegations CCPI, Bethlehem Steel, and Foseco possess market power in a relevant product market become extraneous. But API does not clearly demarcate a "horizontal boycott" allegation in its proposed second counterclaim; indeed, API has alleged market power in a product market and the words "horizontal boycott" are nowhere to be found in the amended answer. API cannot leave CCPI and the Court guessing as to what type of antitrust violation it alleges. If API claims a horizontal boycott under Section I of the Sherman Act and believes it need not then allege a relevant product market or market power, it may do so, but in clear and explicit terms. If it opts to allege a relevant product market and market power, as it seems to have already done, see id. at ¶ 42, then it must do so clearly and comprehensibly. API cannot simply cry "antitrust" or "Sherman Act" in a crowded courtroom and occupy its opponents and the Court with head-scratching attempts to peer through the smoke.

In its proposed fourth counterclaim, API alleges CCPI, in combination with Bethlehem Steel and Foseco, has attempted to monopolize the impact pads market in violation of Section 2 of the Sherman Act, 15 U.S.C. § 2.⁵ To state a claim for attempted monopolization, API must prove: (1) CCPI, Bethlehem Steel, and Foseco...